How Does William Demant Holding A/S’s (CPH:WDH) Earnings Growth Stack Up Against Industry Performance?
For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on William Demant Holding A/S (CPH:WDH) useful as an attempt to give more color around how William Demant Holding is currently performing.
View our latest analysis for William Demant Holding
Were WDH’s earnings stronger than its past performances and the industry?
WDH’s trailing twelve-month earnings (from 31 December 2017) of ø1.75b has jumped 20.22% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.93%, indicating the rate at which WDH is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at whether it is only because of industry tailwinds, or if William Demant Holding has seen some company-specific growth.
The ascend in earnings seems to be propelled by a strong top-line increase outpacing its growth rate of costs. Though this resulted in a margin contraction, it has made William Demant Holding more profitable. Scanning growth from a sector-level, the DK medical equipment industry has been growing its average earnings by double-digit 18.84% in the prior year, and a more subdued 8.09% over the past five. This growth is a median of profitable companies of 4 Medical Equipment companies in DK including Ambu, GN Store Nord and Coloplast. This suggests that whatever tailwind the industry is deriving benefit from, William Demant Holding is capable of amplifying this to its advantage.
In terms of returns from investment, William Demant Holding has invested its equity funds well leading to a 23.67% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 10.97% exceeds the DK Medical Equipment industry of 10.54%, indicating William Demant Holding has used its assets more efficiently. However, its return on capital (ROC), which also accounts for William Demant Holding’s debt level, has declined over the past 3 years from 27.05% to 22.70%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 66.87% to 74.87% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While William Demant Holding has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research William Demant Holding to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for WDH’s future growth? Take a look at our free research report of analyst consensus for WDH’s outlook.
Financial Health: Are WDH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
